The Power of Iceland: RMS and Verne Global Take to the Cloud


The Power of Iceland: RMS and Verne Global Take to the Cloud

By Doug Barney, TMCnet Editor at Large  |  January 03, 2014

Cloud computing, undoubtedly the latest great trend in technology, is quickly becoming a mainstream alternative to traditional on-premises computing options. One of the key factors is its value in allowing businesses to focus on their core competencies, while allowing true IT experts to manage the infrastructure that drives those businesses.

The ability to move computing resources and data from physical to virtual servers, means workloads become independent of any specific hardware and resources can be moved and scaled up or down as needed between virtual servers.

“Infrastructure no longer is a barrier to scale,” says Neela Jacques, executive director of the Open Daylight Project (previously Sr. Cloud Strategist at VMware). “It turns the traditional constraint on its head.”

Still, despite the gains made in performance and security among public cloud providers and the popularity of public clouds, like Amazon’s EC2, the majority of mission critical cloud projects are taking place in private or hybrid cloud environments, because they allow businesses to manage their cloud networks and understand exactly what to expect in terms of latency and speed.

“It’s about time compression – helping businesses make better decisions more quickly,” explains Ed Laczynski, senior vide president, cloud strategy and architecture for Datapipe (News - Alert). “That value alone is extremely compelling.”

The RMS Story

Born out of a Stanford University project in 1988, RMS is a catastrophic risk modeling vendor, developing risk models for the largest businesses in the insurance industry based on exposure to multiple risk factors, including natural disasters, terror threats, and other catastrophic events. Its risk models give insurers, reinsurers, and the financial industry visibility into risk analyses, allowing them to make intelligent business decisions.

Now, the idea of insuring items and people is almost three-and-a-half centuries old, dating back to the Great Fire of London. Even then, the unpredictable nature of catastrophic events posed a challenge when quantifying cost of catastrophic risk. Since then, while the latest technology has advanced modeling capabilities, the complexity of modeling has also increased as insurers became more aware of different factors having an impact on risk models.

“Modeling has become much more sophisticated,” notes Dr. Robert Muir-Wood, chief research officer at RMS. “For instance, storm surge is very complex. We embarked on huge project in 2009-10 to understand storm surge risk and modeling, which entails understanding, for instance, the hurricane, but also patterns a few days ahead of landfall.”

In order to run – and re-run – complex risk models based on changing weather patterns and geopolitical circumstances, RMS requires massive computing resources. In fact, RMS had 500 cores running for nine months in its data center in order to run all the models needed to create an analysis for hurricane risk. The benefit was having events like Hurricane Sandy in existing simulation models when it hit, despite the tremendous resource drain required to run the analyses.

Growth for any compute-intensive business is a challenge due to the significant data center investments that are required. In RMS’ case, as models become more complex, the firm must run more models, intensifying compute requirements.

“Consider the number of potential catastrophic events, and then the potential number of people and businesses affected – there are a tremendous number of risk models that must be run,” Muir-Wood says. “Today’s models are not simply the culmination of history; things have changed.”

That means existing models must be re-run based on the latest data and new models should be more sophisticated to allow clients to be more nimble and accurate in assessing risk. Climate change, for instance, presents such a need. It is a major challenge for the insurance industry, as predicting risk based on unknown climate change makes it difficult to assess the price of risk today.

The understanding that, in order to sustain a successful business, RMS would have to make a significant investment in infrastructure, caused it to re-evaluate its model and, eventually, started it on its journey to the cloud. Cloud computing, it felt, represented its best opportunity to deliver its modeling services in an elastic and highly scalable model to accommodate risk models that would only continue to grow in complexity and compute requirements.

Bobby Soni, Chief Platform and Services Officer at RMS, explains the great value in cloud computing is only possible because consumers of digital services don’t care where the servers are physically located, or where the processing takes place.

“They only care about the experience of using their services, Soni pointed out during a launch event in Reykjavik, Iceland. “They don’t want to see where the data center is – it could be in Timbuktu, for all they care. That is only possible if you can stand behind the security and reliability and SLA that is required for business-critical applications.”

Verne Global and the Iceland Factor

The decision to “go cloud” is one thing. For RMS, however, it gets more complicated, as it would choose to build its own private cloud, rather than leverage popular public clouds like Amazon or Rackspace (News - Alert). The decision was taken largely based upon Soni’s theory that security and reliability and trust are paramount to customer satisfaction, and public clouds have too many “what ifs.” The risk wasn’t worth it for a company that knows risk inside and out.

The decision then became where to build its RMS Cloud environment. Domestic locations abound, as well as alternatives in the EU, but for a business with key customers across the globe, the ideal location would be a site that would be able to serve both the US and European data center markets with equally low latency.

Enter Verne Global, which had built its data center in a former NATO command center just outside the Icelandic capital city of Reykjavik. Certainly security would seemingly not be an issue, considering NATO had used the site as a missile storage facility during the Cold War. But, beyond the inherent security of a former military facility, Iceland holds natural advantages held by few other locations, noted Lisa Rhodes, Verne Global’s vice president of marketing and sales.

Foremost is its 100 percent renewable energy sources, between its hydroelectric and geothermal plants. While visitors to the volcanic island are treated to exotic views of magnificent waterfalls and geysers, and can spend time in geothermal springs, these plants are busy powering the island with highly cost-effective energy, with no dependence upon fossil fuels (it has diesel backup, if needed).

With power accounting for as much as 40 percent of data center operating costs, according to Verne Global CEO Jeff Monroe, and perhaps even more with high density compute applications, like RMS’ modeling, not only was the cheap power a key consideration, but equally important was the free air cooling thanks to a cool and windy climate that dominates Iceland, with averages temperatures topping 50 degrees Fahrenheit only in July and August (and even then, only by a few degrees).

Verne Global’s facility sports massive slats in its walls, resembling very large window blinds, which are opened to allow the flow of cool air into the data center’s external cavity. The cool air is then pumped into the data center via a series of ducts to counter the heat generated by rows of servers. The truth is, other than that, the facility looks and behaves like a data center (as it should), with cabling and racks of servers and firewalls in abundance.

Factor in a technologically proficient workforce and connectivity to both North America and Europe thanks to multi-redundant, multi-Terabit cable systems that were upgraded in 2009, and Iceland quickly emerged as the logical home for RMS Cloud.

“Carbon neutral is a big component,” notes Monroe. “But, the other part is it is the ultimate energy hedge for businesses, especially those running high-density compute applications.”

Iceland’s Minister of Industry Ragnheiður Elín Árnadóttir agrees, noting the vital role the data center industry plays in the evolution of a technology-focused global economy. She noted that Iceland has been focusing on power-intensive business for some time, having built an impressive aluminum smelting industry, and sees its energy resources as a tremendous asset for future growth of its data center market.

“Verne Global’s success story is an inspiration and gives us hope for more good news in this important sector in Iceland,” she says. “The data center industry will be growing fast and, being dependent upon energy, it is valuable to be able to reduce the carbon footprint for the industry as a whole.”

RMS Cloud and RMS(one)

Naturally, RMS did its own risk modeling before committing to Verne Global’s facility. After all, the facility sits in the shadows of Iceland’s famed active volcanoes – recall the massive ash cloud that grounded flights across Europe in 2010 when the ice-cap covered Eyjafjallajokull erupted. But, once the risk assessment proved favorable, its plans to build RMS Cloud, its first data center outside its own facilities, were set in motion. 

RMS called on many of the industry’s top brands to build out its private cloud, several of which were present at its media tour of the facility in September, including Datapipe, VMware, EMC, and local integrator Advania – in addition to its Intel (News - Alert)-based compute platform from Cisco and firewalls from Palo Alto Networks.

The result is a massive infrastructure, completed in less than four months, boasting 5,000 cores, burstable to 30,000 cores – almost unimaginable scale, according to Paris Georgallis, vice president of platform operations at RMS.

“It would be an understatement to say if we didn’t have great partners, we wouldn’t have been able to [complete the project] in the amount of time we have done it, to get two production centers up and running, in California and Iceland,” he posits. “RMS Cloud is not a generic public cloud; it is a purpose-built cloud to do one thing and one thing only – deliver results and predictable performance that allow us to write and meet SLAs.”

RMS Cloud now provides the underpinning infrastructure for RMS(one), the company’s real-time exposure and risk management environment. An industry first, RMS(one) takes the technology out of the hands of RMS’ customers and allows them to run risk models in a secure environment, allowing them to focus on their core business rather than having to manage and maintain RMS technology in their own facilities.

With the ability to run a one million-location scenario in under three minutes, RMS(one) delivers risk analyses orders of magnitude faster than what had been previously possible, with the ability to re-run models as needed. With the total number of locations expected to come online eclipsing one million, RMS has reinvented a market it had already dominated. But, its plans for RMS(one) include more than simply delivering sub-minute response for its customers’ risk assessments. RMS plans to make its models available as a resource library for others in the market as well, becoming the cornerstone of the global risk modeling market.

None of it would be possible without the massive power of cloud computing, which provides the scalability to deliver compute and storage resources for what may well end up being the entire risk modeling community worldwide. Eventually, that scalability could lead RMS to extend RMS(one) beyond the insurance industry,  possibly to the real estate market, government entities, or others that require powerful risk analysis.

“We believe this is truly an ecosystem,” concludes Soni. “RMS develops models, but there are many others that do as well, and we are providing the ecosystem that can host all these models in one place. It’s kind of like an app store model, where clients and competitors can write applications on the platform for all to use.”

While RMS Cloud offers many process efficiencies that benefit both RMS and its customers, the real value of its migration is a complete business transformation thanks to RMS(one), not only for RMS, but its entire industry, which has now been reinvented by a forward-looking team that wasn’t content resting on the laurels of its success to date. With its partners at Verne Global and Datapipe, RMS and its customers, which are not IT companies, are able to embrace IT while focusing on their core businesses.

As for the Iceland data center market, Rhodes doesn’t know if there will be a gold rush on Iceland or not, but the location is certainly becoming part of an increasing number of conversations, much more so than in the past. RMS has done its homework, and it looks like its own risk assessment is about to pay off in spades.

Edited by Stefania Viscusi
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